PhD Thesis: Legal and Regulatory Aspects of Mobile Financial Services

University of South Africa, Pretoria [Phd/Lld Thesis]

820 Pages Posted: 22 May 2018 Last revised: 13 Jun 2019

Date Written: November 30, 2012


The thesis deals with the emergence of bank and non-bank entities that provide a range of unique transaction-based payment services broadly called Mobile Financial Services (MFS) to unbanked, underserved and underbanked persons via mobile phones. Models of MFS from Mobile Network Operators (MNOs), banks, combinations of MNOs and banks, and independent Mobile Financial Services Providers are covered. Provision by non-banks of ‘bank-type’ services via mobile phones has been termed ‘transformational banking’ versus the ‘additive banking’ services from banks.

All involve the concept of ‘branchless banking’ whereby ‘cash-in/cash out’ services are provided through ‘agents.’ Funds for MFS payments may available through a Stored Value Product (SVP), particularly through a Stored Value Account SVP variant offered by MNOs where value is stored as a redeemable fiat- or mobile ‘airtime’-based Store of Value. The competitive, legal, technical and regulatory nature of non-bank versus bank MFS models is discussed, in particular the impact of banking, payments, money laundering, telecommunications, e-commerce and consumer protection laws. Whether funding mechanisms for SVPs may amount to deposit-taking such that entities could be engaged in the ‘business of banking’ is discussed. The continued use of ‘deposit’ as the traditional trigger for the ‘business of banking’ is investigated, alongside whether transaction and paymentcentric MFS rises to the ‘business of banking.’

An extensive evaluation of ‘money’ based on the Orthodox and Claim School economic theories is undertaken in relation to SVPs used in MFS, their legal associations and import, and whether they may be deemed ‘money’ in law. Consumer protection for MFS and payments generally through current statute, contract, and payment law and common law condictiones are found to be wanting. Possible regulatory arbitrage in relation to MFS in South African law is discussed.

The legal and regulatory regimes in the European Union, Kenya and the United States of America are compared with South Africa. The need for a coordinated payments-specific law that has consumer protections, enables proportional risk-based licensing of new non-bank providers of MFS, and allows for a regulator for retail payments is recommended. The use of trust companies and trust accounts is recommended for protection of user funds.

Keywords: Additive Banking; Agents; Airtime; financial inclusion; Store of Value; Allocation of Loss; Allocation of Risk; Anti-Money Laundering (AML); Aristotle; Austrian School; Banks; Bilateral Juristic Act; Bottom of Pyramid; Branchless Banking; Digital Financial Services; Financial Inclusion

Suggested Citation

Perlman, Leon, PhD Thesis: Legal and Regulatory Aspects of Mobile Financial Services (November 30, 2012). University of South Africa, Pretoria [Phd/Lld Thesis]. Available at SSRN: or

Leon Perlman (Contact Author)

Columbia Business School ( email )

New York, NY
United States

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